Create a program that taxes workers and employers to pay people a replacement wage when they take time off work, and you can bet it will become popular. But popularity is not the same thing as sound policy, and this program’s growing costs and distortions are harming many of the very workers it claims to help.
People can use Paid Family and Medical Leave (PFML) benefits to take time off work for their own or others’ medical needs or to welcome a new family member. In “Loving paid leave to death,” The Washington Observer reports that PFML claims have doubled in just four years and that the program is expected to be insolvent by 2030, if nothing changes about the way the tax is collected or the way money is distributed. A legislative report describes the program’s money problem this way: “The (PFML) account is projected to experience ongoing, periodic deficits through 2028, with a consistent deficit starting in 2029 into the future.”
The Observer article outlines two ways majority-party lawmakers are considering keeping the program alive and able to pay benefits in the generous way it has been. One is to have higher-income people pay even more into the fund. The other is raising the tax’s rate cap above 1.2%, which would mean every worker pays more.
How much more?
In the 2025 legislative session, lawmakers proposed increasing the tax rate cap to 2%. The proposal stalled, but it remains top of mind for PFML-supportive legislators. That would mean $2 of every $100 in earnings would go to fund PFML. And in a fiscal note filed this session for a bill related to how the payroll tax rate is calculated, the Employment Security Department estimated the rate would have to rise to 2.08% by 2035 to meet program needs in the absence of a rate cap. So even that 2% proposal would not suffice.
That bill, Senate Bill 5292, passed, and it did retain a 1.2% rate cap, as I urged in testimony several times. But I worry it sets up an easier path to a future rate-cap increase.
In 2019, the rate started at just 0.4%. Today, the payroll tax is 1.13% of wages, nearly reaching the cap, and reports show that this will happen in 2027. Workers should prepare for another pay decrease in January, courtesy of the state.
Part of the reason PFML is financially strained is high use. Another part is the program’s design: relatively low eligibility thresholds and continued expansions. PFML allows workers to qualify after a relatively modest work contribution. A 2021 expansion also allowed benefits to be used for an unusually broad class of “family members,” including someone who simply has an expectation of relying on the worker for care, whether they live together or not.
My research shows that a lot of the money leaving the PFML fund goes to repeat use — people receiving payouts more than once. It also shows that high-income workers used the program more than twice as often as those in the lowest wage group in fiscal year 2025.
Better fixes than another pay decrease for workers
PFML should be repealed. It is a perk provided by fellow workers, not a taxpayer-provided safety net for people in need. Wages taken from lower-income workers — many of whom need every dollar they earn to make ends meet — are often handed to people with greater means. That is not a program Washington state’s leaders should brag about. The policy is harming many of the W-2 workers forced to fund it.
If lawmakers insist on keeping this misguided program, they should look for benefit-side solutions instead of increasing the payroll tax on workers even further.
This session, four bills introduced by Sen. Curtis King, R-Yakima, would have done just that. Unfortunately, they did not receive hearings or consideration. One would have limited the repeat use I wrote about earlier. Another would have reduced the number of weeks a worker could receive replacement wages while away from work. Senate Ways and Means ranking member Sen. Chris Gildon, R-Puyallup, also rightly suggested eliminating a labor-friendly loophole that allows state employees to collect vacation pay while on PFML.
In addition to sending money to people with more resources than many of those required to fund the benefits, loose oversight of the program is resulting in reports of misuse. Talk among workers about trying to recoup some of what the state is taking from their wages is also growing, which suggests misuse may become more common.
ESD says Washington’s average annual wage was $95,160 a year in 2024. The math shows that a worker earning that amount will have $768.09 taken from earnings in 2026 to fund PFML, while the employer will pay another $307 on that worker’s behalf. That is $1,075 in just one year for benefits many workers don’t use. (Calculate what you pay here.)
Supporters call PFML a “social insurance” program. But this social program has many lower-wage workers subsidizing higher-income families. It is time to let it go. Workers should be allowed to keep more of their wages for their own needs — the two PFML prioritizes and many others it does not.
